A Trust Income Mortgage is perfect for those who are primarily supported by trust income and therefore cannot submit conventional pay stubs and employment verification when applying for a mortgage.
If you are the beneficiary of a trust, check out our information on Trust Income Mortgages to find out if it might be the right fit for your next home purchase.
What is a Trust Income Mortgage?
A Trust Income Mortgage is a home loan product available to trust beneficiaries as an alternative to a conventional mortgage. For a Trust Income Mortgage, income from a trust is used for qualification in place of employment history, pay stubs, and employer verification.
What Terms Can I Expect on a Trust Income Mortgage?
As always, terms will vary, but it is common to need at least three years of trust income to qualify for a Trust Income Mortgage. However, unlike a conventional income verification where the lender will only look at past income, a lender will need to confirm the balance of the trust and how it is paid out to verify that your trust income will continue for at least three years in addition to the two year income history.
The trust income can also be combined with another stream of income to qualify. In this case, the lender will want to see pay stubs and employment verification in addition to the trust information. The incomes will be combined when going through the mortgage qualification process.
What Will My Lender Want to See?
To qualify you for a Trust Income Mortgage, the lender will need documentation of the trust. This will include documents verifying the amount, frequency, and duration of your trust income payments.
You will also need to present tax returns that show you have been receiving this same trust income for at least the past two years.
If you plan to take out additional funds from the trust to use for down payment or closing costs, be prepared to verify that the balance of the trust will not be impacted enough to change the other qualification factors.
In other words, if your trust has a balance of $1,000,000, and your income from it each year is $100,000, the lender will see that you have ten years of income available in the trust. However, if you plan to take $200,000 from the trust to use for down payment and closing costs, the lender will see that you have eight years of available income in the trust. In some cases, taking funds from the trust for down payment and closing costs will make a big enough difference to determine whether you will qualify.
Who is the Best Fit for a Trust Income Mortgage?
A Trust Income Mortgage is best for someone who either does not have verifiable income outside of trust income, or someone who wants to qualify for more than their employment income alone will achieve.
You may also find a Trust Income Mortgage to be the right fit for you if you are hoping for a shorter escrow period. In some cases, a Trust Income Mortgage can offer an accelerated pace. If you are able to present all of the necessary documents for the trust immediately, the lender may be able to move more quickly without needing to verify income and employment with a third-party employer.
If you are the beneficiary of a trust and will be receiving income from it for at least the next three years, it is very possible that a Trust Income Mortgage may be a great fit for your needs. To find out more, reach out to us today to see which type of mortgage will be best for your specific situation.
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